Fashion resale marketplace ThredUp has sold its European business to focus on its core US domestic market.
ThredUp expanded into Europe in 2021 with the acquisition of Remix, a Bulgarian startup operating in a handful of Central and Eastern European markets. Last May, ThredUp announced a new general manager, Florin Filote, to lead its European operations, and Filote is now leading the management transition for the division he leads.
Founded in 2009, ThredUp specializes in used clothing and accessories and has raised more than $300 million ahead of an IPO in 2021. Like many startups that went public during that period, ThredUp did not have a good time, with its market capitalization falling from $1.3 billion at the time of its IPO to a low of $60 million last month.
The company confirmed in its second quarter 2024 results in August that it is exploring Remix sales to focus exclusively on the US. That’s likely because European revenue fell 18% year-over-year to just $13 million. Gross profit fell 25% to $3.6 million.
In its third-quarter earnings last month, ThredUp said it had entered into a non-binding agreement with Remix management for the purchase. That’s on the back of broader momentum following better-than-expected third-quarter results and guidance that sent the stock soaring to nearly $200 million. .
In a filing with the Securities and Exchange Commission (SEC) today, ThredUp confirmed some of the details of the deal and revealed that Filote paid just one euro (1 euro) for 91% of the common stock in the new company called Remix US Holdings. . ThredUp also said it made a “final cash investment” of $2 million in Remix during its initial period as an independent entity.
The purchase price may seem cheap, but there’s a catch. In addition to the 9% stake held by ThredUp, Remix issued a convertible promissory note from ThredUp worth 61.6 million euros ($64.7 million) plus interest. This represents the amount ThredUp has invested in Remix since its acquisition three years ago.
So there’s a big debt component at play here as well. This amount is repayable in 2034 or upon the occurrence of a liquidity event such as an acquisition, IPO, or other third-party investment.
“This is a mutually beneficial outcome for both ThredUp and Remix,” James Reinhart, co-founder and CEO of ThredUp, said in a statement. “We are confident that Remix will succeed under Florin Filote’s leadership and the expertise of the team. “This transaction will allow ThredUp to focus on its core U.S. business and continue to innovate and advance the market.”
